# In the matter of Videocon Telecommunications Limited IA No. 1031 of 2020 in

> NCLT judgment dated 2020-10-07. Citation: TCN-2020-NCLT-00442. The case involves an application by the Resolution Professional (RP) of Videocon…

- **Court:** NCLT
- **Order date:** 7 Oct 2020
- **Citation:** TCN-2020-NCLT-00442
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/videocon-telecommunications-limited-ia-no-1031-of-2020-in-79ecb3aa

## Summary

### Background

The case involves an application by the Resolution Professional (RP) of Videocon Telecommunications Limited (VTL), the Corporate Debtor, seeking directions against the Department of Telecommunications (DoT) and Bank of Baroda (BoB) regarding bank guarantees. VTL had availed credit facilities from State Bank of India and other banks, including BoB. DoT provided services, including 2G Spectrum Licenses, to VTL. BoB issued bank guarantees on behalf of VTL to DoT for securitization of usage charges. SBI initiated Corporate Insolvency Resolution Process (CIRP) against VTL under Section 7 of the Insolvency and Bankruptcy Code (IBC). The Tribunal directed consolidation of 13 out of 15 Videocon Group Companies and appointed an Interim Resolution Professional (IRP), later

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## Facts

Videocon Telecommunications Limited (VTL) availed credit facilities from State Bank of India and other banks, including Bank of Baroda (BoB). The Department of Telecommunications (DoT) provided services, including 2G Spectrum Licenses, to VTL. BoB issued bank guarantees on behalf of VTL to DoT for securitization of usage charges. The Supreme Court cancelled 122 Unified Access Services (UAS) Licences in the 2G Spectrum allocations, including 21 licenses of VTL. VTL requested the release of bank guarantees, but DoT required their renewal. The Hon'ble Supreme Court passed certain orders during the continuance of the CIRP of the Corporate Debtor. DoT issued notices to VTL demanding payment of outstanding dues and for encashment/renewal of bank guarantees. DoT filed claims

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## Issues and analysis

### Issue 1: Whether the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 applies to bank …

**Ratio:** Bank guarantees, particularly performance guarantees, are not considered 'security

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**Reasoning:** The Tribunal reasoned that Section 3(31) of the IBC explicitly excludes performance

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**Interpretation:** Section 3(31) of the IBC defines 'security interest' but specifically excludes

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**Application:** In this case, the bank guarantees furnished by BoB on behalf of VTL to DoT were

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## Parties

- **Judges:** Janab Mohammed…; RavikumarDu…
- **Appellants:** Abhijit Guhathakur…
- **Respondents:** VIDEOCON TELECOMMU…; DEPARTMENT OF…

## Timeline

- **2012-02-02 — Supreme Court…**: The Supreme Court cancelled 122 Unified Access Services (UAS) Licences in the 2G Spectrum…
- **2014-05-26 — Corporate Debto…**: The Corporate Debtor requested release of the bank guarantees in response to the demand…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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